Axis Bank Q3 Results Update: Earnings estimates miss; brokerage slash targets
Axis Bank reported a three-quarter year-on-year (YoY) increase in net profit to Rs 6,304 crore for Q3FY25, missing estimates of Rs 6,399 crore, according to Zee Business. Sequentially, profit fell by 9 percent, down from Rs 6,918 crore in Q2FY25.
NII growth below forecast, NIMs shrink
Net Interest Income (NII) grew nine percent YoY to Rs 13,606 crore, compared to Rs 12,532 crore in the previous period. However, this was slightly below Zee’s estimate of Rs 13,756 crore. The bank’s Net Interest Margin (NIM) fell to 3.93 percent, down from 4.1 percent last year and 3.99 percent in the previous quarter.
Asset quality under pressure
Axis Bank’s Gross Non-Performing Asset (GNPA) ratio increased to 1.46 percent, compared to 1.44 percent in Q2FY25. Net NPA rate increased marginally to 0.35 percent from 0.34 percent in the previous quarter. The bank reported a total of Rs 5,400 crore, and slippages were adjusted to recover Rs 2,217 crore. Retail slippages accounted for Rs 2,928 crore, while wholesale recorded negative slippages of Rs 761 crore.
Credit and deposit growth is slow
Net growth grew 9% YoY and 1% quarter-on-quarter (QoQ). Total deposits increased by thirteen percent YoY, reflecting slower growth than expected due to tight liquidity conditions.
Buyers review target prices
After the results, brokerages revised their target prices. Emkay Global lowered its target to Rs 1,300 from Rs 1,400 but maintained a ‘buy’ rating. HSBC cut its target to Rs 1,170 from Rs 1,350, retaining its ‘buy’ tag. Morgan Stanley maintained an ‘overweight’ rating with a price target of Rs 1,300, citing long-term growth potential despite current volatility.
Managers are looking carefully
In their post-earnings comments, executives highlighted the challenging macroeconomic environment of the deficit. They foresee moderation in growth metrics and remain focused on maintaining deposit quality, cost of funds, and prudent asset selection.
Axis Bank’s Q3 performance highlights its struggle to balance profitability and growth amid macroeconomic headwinds, leaving investors cautious about near-term prospects.
